Tyson Foods Inc's first-quarter profit nearly doubled and surged past estimates, boosted by higher prices, sending the largest US meatpacker's shares up 5% in premarket trading on Monday.
At a time when demand from restaurants is rebounding as they launch new menu items to bring back customers lost during the pandemic, raising meat prices to combat higher labour and transportation costs has greatly benefited US meatpackers.
In the quarter, Tyson said average beef prices were up nearly 32%, offseting a decline in volume caused by supply chain constraints. This helped Tyson's operating margin grow to 11.3%, up from 6.7%, a year earlier.
The higher meat prices has, however, had the Biden administration concerned as profits continue to mount at meatpackers.
Analysts have said increased operating margins could attract more unwanted scrutiny from Washington for Tyson and three other industry behemoths that slaughter about 85% of grain-fattened cattle carved into steaks for consumers.
Overall sales for beef rose about 25% to $5 billion, helping Springdale, Arkansas-based Tyson's sales rise 23.6% to $12.93 billion in the first quarter ended 1 January. Analysts on average were expecting revenue of $12.18 billion, according to IBES data from Refinitiv.
Net income attributable jumped to $1.12 billion and excluding items, Tyson earned $2.87 per share, also beating estimates of $1.95 per share.
Commenting on the performance, Donnie King, president and CEO of Tyson Foods said, “Our performance reflects the resilience of our multi-protein portfolio even with continued volatility in the marketplace.
“We remain committed to winning with our team members, winning with our customers and consumers and winning with excellence. We have the right team who are taking the right actions and as a result, we believe our future is bright.”